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Solar Lights Up Outlook for Renewable Energy in Texas
Improving economics and government tax incentives have spurred investment in utility-scale solar facilities in Texas.
Dallas Fed Energy Survey Results Point to Bleak Outlook for Oil Industry
The price of West Texas Intermediate (WTI) crude oil has plunged more than 50 percent since the start of the year as the coronavirus (COVID-19) pandemic has taken hold and a dispute between energy giants Saudi Arabia and Russia threatens to flood the market with crude oil.
Working Paper
Investing in the Batteries and Vehicles of the Future: A View Through the Stock Market
A large number of companies operating in the EV and battery supply chain have listed on a major U.S. stock exchange in recent years. This paper investigates 1) how these companies’ stock returns are related to systematic risk factors that can explain movements in the stock market and 2) how these companies’ idiosyncratic returns are related to one another. To do so, I compile a unique data set of intradaily stock returns that spans the supply chain, including companies focused on the mining of battery and EV-related critical minerals, advanced battery technology, lithium-ion battery ...
Working Paper
Jointly Estimating Macroeconomic News and Surprise Shocks
This paper clarifies the conditions under which the state-of-the-art approach to identifying TFP news shocks in Kurmann and Sims (2021, KS) identifies not only news shocks but also surprise shocks. We examine the ability of the KS procedure to recover responses to these shocks from data generated by a conventional New Keynesian DSGE model. Our analysis shows that the KS response estimator tends to be strongly biased even in the absence of measurement error. This bias worsens in realistically small samples, and the estimator becomes highly variable. Incorporating a direct measure of TFP news ...
Journal Article
Did speculation drive oil prices? market fundamentals suggest otherwise
Oil market speculation became an especially popular topic when the price of crude tripled over 18 months to a record high $145 per barrel in July 2008. Of particular interest to many is whether speculators drove oil prices beyond what fundamentals would have otherwise justified. We explore this issue over two Economic Letters. In this article, we look at evidence from the physical market for oil and conclude that fundamentals, and not speculation, were behind the dramatic rise and fall in oil prices. In our companion Economic Letter, we examine the futures market.
Journal Article
Market expectations and corn prices: looking into future to explain present
Market expectations of future supply and demand are important in determining current prices for agricultural products such as corn, which are harvested annually and stored for later use. Prices can quickly move when beliefs change?due to new data, for example?even if events far in the future are involved.
Modern Refineries, Shale Boom Upend Traditional Oil Price Relationships
Different crude oils can sell for dramatically different prices with sometimes far-reaching effects on the energy industry—from impacts on oil producers’ production decisions to oil refineries’ profit margins.
Working Paper
Closer to One Great Pool? Evidence from Structural Breaks in Oil Price Differentials
We show that the oil market has become closer to "one great pool," in the sense that price differentials between crude oils of different qualities have generally become smaller over time. We document, in particular, that many of these quality-related differentials experienced a major structural break in or around 2008, after which there was a marked reduction in their means and, in many cases, volatilities. Several factors explain these shifts, including a growing ability of the global refinery sector to process lower-quality crude oil and the U.S. shale boom, which has unexpectedly boosted ...
Electric Vehicles Gain Ground but Still Face Price, Range, Charging Constraints
Further improvement seems necessary before a wholesale switch to EVs occurs in the U.S.
How Falling Oil Prices in Early 2020 Weakened the U.S. Economy
The benchmark West Texas Intermediate (WTI) price of oil dropped by more than half from Jan. 21 to April 3. This oil price decline has weakened rather than strengthened the U.S. economy, making this event different from past episodes of falling oil prices.